It is clear that trade redistributes welfare and results in net gains in growth and in terms of productive and allocative efficiency. With that in mind, I formulated this question: From a historical context, what were some of the ways NAFTA impacted the U.S., Canada and Mexico in terms of trade, and how visible are those effects today? First of all, NAFTA eliminated several barriers to trade, including tariffs, thus enabling more trade. This increase in trading activity redistributed welfare by shifting high-paying, more costly manufacturing jobs in the U.S. to lower-cost locations in Mexico. Thus, trade proved Mexico to be the winner in terms of productive efficiency, which is perhaps the reason why its exports have grown at faster rates than the U.S. in certain sectors and time frames. However, the increase in trading activity also created hundreds of thousands of jobs in the U.S. within the first five years after NAFTA. In addition, trade after NAFTA helped to lower the U.S. unemployment rate while at the same time making many products (including imports) cheaper. Moreover, one way in which the trade resulting from NAFTA promoted allocative efficiency was the U.S.'s increased utilization of the labor of Mexican maquiladores by way of the U.S. allocating its resources to Mexico for final assembly. Canada has also experienced substantial growth from trade resulting from NAFTA due to its increased exports relating especially to its productive and allocative efficiencies in auto, industrial and machine parts. Like all free trade agreements, NAFTA has produced some winners and losers. The impacts/effects from post-NAFTA trade are still very visible today. I think the most visible impacts are the roughly 3.1 million U.S. manufacturing jobs lost, Mexicans increasingly flocking to the U.S. because of some lower standards of living resulting from the trading, and Canada's improved strength in further-enhancing and growing the U.S.-Canada trade partnership, the largest worldwide. Despite the negative effects, I disagree with critics of NAFTA because it truly made North America better off by giving the U.S., Mexico and Canada new and stronger comparative advantages.
Sources researched:
http://www.nytimes.com/2009/03/24/business/worldbusiness/24peso.html?pagewanted=all
http://useconomy.about.com/od/tradepolicy/p/NAFTA_Advantage.htm
http://www.britannica.com/EBchecked/topic/418784/North-American-Free-Trade-Agreement-NAFTA
http://www.factcheck.org/tag/nafta/feed/
I would have to agree that NAFTA has been beneficial to North America; especially Canada and Mexico. I would also comment that it has helped the United States as well. Even though there has been a loss of 3.1 million manufacturing jobs, since the inception of NAFTA figures show an increase in overall U.S. employment of 24 percent since NAFTA's inception. Declining unemployment rates have accompanied this over the same period. In addition, the United States Trade Representatives (USTR) cites data showing that inflation-adjusted U.S. wages rose 19.3 percent between 1993 and 2007, as compared to only 11 percent in the fourteen years prior. In saying this I would have to say i'm confused on your stance to how NAFTA has affected the United States. You only cited the lost jobs in the United States and the positive effects it has had no Canada and Mexico. I'm curious as to what you think the effect of NAFTA has had on the United States alone besides the strengthening of trade relationships.
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